The proliferation of data and connected devices, particularly wearables, will continue to make it easier for life insurance companies to play an active role in shaping customer health-to everyone’s benefit. Technology will play an important part in this transition. We believe these factors will motivate life and annuities manufacturers to engage customers in the shared-value economics of healthy living to increase policyholder longevity. 4 “Noncommunicable diseases,” World Health Organization, June 1, 2018, who.int. Further, noncommunicable diseases-those more closely linked to lifestyle and behavior, such as diabetes, heart disease, and lung cancer-will account for 71 percent of all annual deaths globally and represent an increasing proportion of mortality risk. 3 World Population Ageing 2015: Highlights, United Nations, Department of Economic and Social Affairs, Population Division, 2015, un.org. In the coming decade, insurers will play an increasingly prominent role in the health of their customers as life expectancy increases and health trends change.īy 2030, the number of people aged 60 and older will grow by more than 50 percent, from 900 million in 2015 to 1.4 billion. Despite recent increases in online research for life insurance, spurred by COVID-19, the long-term decline of mortality risk is likely to continue. Life insurers have long maintained a focus on mortality protection, but concern over mortality risk has diminished in many markets, which has reduced demand for core products. Several areas offer opportunities for personalization that can strengthen customer relationships.Ī shift to targeted health management. The influence of digital leaders in other industries has raised the bar in insurance as well. Personalize every aspect of the customer experience develop flexible product solutions suitable for a challenging regulatory and interest-rate environment.personalize every aspect of the customer experience.To achieve these goals, we expect winning life insurance companies to outperform in three areas in the decade ahead: We believe the life insurance industry faces a pivotal, dual opportunity: the chance to fulfill growing customer needs while returning to profitability and growth. 2 Johnny Wood, “Retirees will outlive their savings by a decade,” World Economic Forum, June 13, 2019,.
and many are expected to outlive their retirement savings. History,” US Census Bureau, March 13, 2018,. By 2030, all baby boomers will be age 65 or older, 1 “Older People Projected to Outnumber Children for First Time in U.S. The global middle class is rapidly expanding, bringing higher incomes, growing financial wealth, and heightened risks to manage. Economic and demographic trends will also offer tailwinds. Public pension replacement rates are declining and healthcare expenditures are rising-trends also accelerated by the COVID-19 crisis. Indeed, the COVID-19 pandemic has only reemphasized the need for mortality protection. Several trends show promise for the life insurance industry in the next decade. Meeting the moment across three key areas More recently, the COVID-19 pandemic has depressed global interest rates even lower than those seen in the 2007–08 global financial crisis, leading to disproportional impact on life insurance stock relative to the rest of the market (Exhibit 4). Globally depressed interest rates curtailed investment portfolio returns. Global penetration fell to 3 percent, and premium growth within most developed markets, hovering just below 2 percent per year, struggled to match GDP. Life insurers have not benefitted from the bull market (Exhibit 3).
The past decade has also introduced new challenges. Digital and mobile advances have raised the bar on transparency and service quality: customers can now file claims and access agents, insurance quotes, and policy information with a few taps on a screen. The availability of data has skyrocketed, and insurers have made progress in advanced analytics and artificial intelligence.
ENGAGEX INSURANCE PROSPECTING DRIVERS
Developing economies-predominantly emerging markets in Asia that were formerly small contributors-have become global growth drivers and now account for more than half of global premium growth (Exhibit 1) and 84 percent of individual annuities growth (Exhibit 2). The global life insurance industry has seen significant changes over the past decade. Special Report The future of life insurance (23 pages)
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